May 12, 2026 • 24 mins
Staples in our frozen veggie aisles - Watties and McCain - have announced they're closing up shop in New Zealand. Watties is closing factories in Auckland, Christchurch, and Dunedin and their frozen packing lines in Hastings. McCain's is also exiting Hastings by the end of this year. Hundreds of jobs are set to be lost, but the repercussions of these closures will be felt far wider.
What do these closures mean for the growers supplies these companies and their rural communities? Will this be a fundamental change for the sector? Will Kiwis be able to find homegrown veggies on their shelves at the supermarket?
Joining the conversation is Matt Thorn, Business Manager for Process Vegetables and Antony Heywood, former Vegetables NZ Chief Executive.
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Episode Transcript
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(00:11):
Welcome to Blue Chip Diary, the go to podcast for farmers and
growers. My name is Milton Monroe, your
host and technical team manager.What he's in.
McCain staples in the frozen vegetable aisle have just
announced they're closing up shop.
And with these closures, hundreds of jobs going to go.
They've announced factory closures and Auckland,
(00:32):
Christchurch and Dunedin, and they're frozen packing lines and
Hastings. McCain's is also exiting
Hastings with its vegetable processing plant set to close by
January next year. What does this mean for the
growers supplying these companies in their rural
communities? Will this fundamentally change
the sector and will New Zealanders struggle to find home
grown products on their supermarket shelves?
(00:55):
To help me have this conversation, I am joined by
Matt Thorne, Business manager ofProcess Vegetables and chief
executive for Vegetables New Zealand, Anthony Hayward.
Welcome to the show Jeans. So look, let's start at the very
top here. What is in McCain's have come
out and said high operation costs, rising inflation and
cheaper imports are behind thesedecisions.
(01:18):
Is this a fierce animation or doyou think is more to it than
that? Met probably the best person to
talk to this, but I'll do a brief intro if you like Milton
and yeah, we can hand to Matt and he can he can take her take
us all the way to the end if we want to let him do that So look
I think it's a whole lot of little things all coming
(01:39):
together at once and it probablystarted 3 five years ago from
post COVID. There's been a lot of those
increases in input costs that have normally been picked up by
the supply chain and the processors.
But what we have to remember is that the increases in those
(02:02):
input costs like fertiliser, labour, energy, only a certain
amount of that can be pushed through to the end consumer.
So the price really doesn't movetoo much.
All the retail definitely don't want the price to move too much
just because there's probably likely to be supplementary or
parallel importing coming in. So there's always a fine line to
(02:24):
tread. However, the industry has gone
through a lot of change and someof the plants getting pretty old
now too. So there's some things there
that probably need to change. And I think what's happened in
the last 12 months is that some of those import costs have have
got to the level where they justnot acceptable anymore.
(02:46):
So in particular, that's probably energy.
And of course, we've just had the latest minimum wage
increase, which does lift the level of all pay brackets
despite what people say. But Matt, take it away.
You've got some stats that'll help kind of give some clarity
on what the markets looking likeand possibly what the process is
(03:08):
undertaking. Yeah, well, if you think about
processed vegetables, it covers peas, beans, carrots and sweet
corn. The industry say three years ago
was about 80 million. Well, it's paid directly to the
growers. So that's the grower payment on
top of that. Then you've gotta add in what
the process is value is in the chain.
And then on top of that you've got the retail value, which is
(03:30):
significantly higher. So the the closure of McCain's
and Watties, McCain's have got over 100 growers that will be
affected what he's over 200 growers.
Those two closures affect the industry by 42%.
So it's a significant blow to the whole sector.
At the moment, the industry's looking at around $50 million
(03:52):
worth of payment to growers and there is significantly down from
three years ago. Basically just to do with retail
demand is a lot less compared towhat um, what we have been
consuming and we've got the alternates on the shelf that are
significantly cheaper than the New Zealand growers product.
So if we're looking at the situation now next year, the
(04:14):
process vegetable payment to growers will be around $29
million, so significantly down to what it was three years ago.
So it's a real changing time. That's a fact.
That is a phenomenal reduction. That's almost yeah, it it
beggars belief and it's hard to get your head around it.
(04:35):
I mean, that's going to have an enormous flow on impact into
into the local economies where, where these growers are
operated, isn't it? Yeah, it's significant.
I mean, you think about all the different transport providers,
the harvesting companies, the fertiliser companies, the
service providers, the jobs thatare employed, not only just to
those farms that we talked about, but everybody in between.
(04:55):
It's it's pretty catastrophic for New Zealand.
Yeah, catastrophic. That's the that's the word I
think I'm, I was trying to find there.
So tell me a little bit more around these growers.
I mean, the growers that are going to be impacted here, you
know, processed vegetables are obviously just part of their of
their market, but this is going to have an enormous impact on
(05:16):
their whole crop rotation. What they're actually putting in
this is this is huge. Yeah, it's a significant receipt
for them because trying to do land change into dairy or
something like that as a completely different equation.
And yeah, I think there's a lot of question marks about where to
(05:37):
go to from here. No, I don't have the answers,
but it has been tracking that way for a couple of years.
So they have had the unfortunatesituation of where a company
might come in and and say, yes, we'll do a contract for a couple
of paddocks. That's been halved in the last
couple of years with some growers.
So they have got used to the fact that there is less demand
(05:58):
for their product. To tell me a little bit more
around these these these products that are being imported
into New Zealand some of the thecheaper alternatives where are
they coming from and and and howare they able to be so cheap I
mean I. Know if you look at the the
Watties, always look for the Watties tomatoes in a can,
right? That's a bit of a staple.
(06:20):
You go for it, right? When you're looking for, when
you're looking for tomatoes and a can, you just pick them up off
the shelf. But if you actually look at it,
what's on the shelf now, there'sa lot of product coming in from
Italy or from Europe. We don't know what the grade
standards are there in terms of spray regimes, chemical
applications, labour rates, anything like that.
We've got no idea what that product coming into New Zealand.
(06:44):
Right, you've made me question afew of my own choices here.
I know there was a couple of dozens of of 10 Watties tomatoes
ended up in the shopping trolleyon Saturday morning.
I'm going home to check them after this.
Is it legitimately cheaper to grow these crops overseas or are
they just cutting a few more corners?
(07:06):
I don't know. I'm not over there growing it.
Yeah, I guess that's the that's the disadvantage, isn't it to
both of you. I mean, if you you know New
Zealand grown, we know we're we're on a level playing field.
We know we've got the right levels of standards around food
safety and around traceability and assurance.
Suddenly with we're bringing in cheaper products there.
(07:27):
There is a question mark there. Sorry, you were going to say.
Something in and well, there's nothing wrong with that.
At the end of the day, the New Zealand consumer is going to
decide what they want to buy andlet them decide it.
It's fine if it's a dollar. If it's a dollar versus $2.00,
whatever it is, it doesn't actually matter.
New Zealand consumers should be able to choose.
But I think what we should be doing is getting in behind a
campaign where we want to support New Zealand and New
(07:48):
Zealand growers. Like why don't we bring the They
All campaign, which was by New Zealand and what was it again,
Milton, What was that one? Ohh I got you.
It was tech wording, but I can Ican remember the the icon they
used to have the old Kiwi on theside, the old blue Kiwi on the
label. And, and you know, you might get
(08:10):
a bit of buying from the consumers and they might
actually realise that they're that is supporting New Zealand
and we know we've got a better, better product.
Yeah. The other thing that you've got
to remember Milton, over the last 5-10 years, we have done a
lot in our foreign policy on free trade agreements.
(08:30):
And once you get into a free trade agreement, you your
negotiation ability and it's, it's a little bit limited
because you have to have that two way by annual bilateral
trade. And that's what we have to
remember. We have to for us to export to
all these markets, we've got to have that bilateral trade coming
(08:52):
back. So is that something that we
have to be a little bit circumspect on?
The other thing you mentioned before about is this a getting
close to a dumping our situation.
So is the product coming into New Zealand it at a rate which
is not overly subsidised and landed in New Zealand, which
(09:16):
pretty much means that it's not competitive for the New Zealand
growing product. So we probably have to be a
little bit tighter on how we howwe view that and that we've got
levers in place that we can use around that, whether it S the
Commerce Commission or anything.But we probably need to find out
what those thresholds are too, because is there, if there is a
(09:38):
non conformance, where does where does that number need to
be before it's, it's considered something that should be
investigated. So I think this is a time where
we probably do need to ask some of these questions because we
are talking about national security as much as food
security here, because if we have 50% of our industry exit,
(09:59):
it does put a lot of constraint on some of those supply chains.
So, and to the other point, future growth are very good,
like you say, crop rotation, right?
So if we remove X number of products from a rotation, what's
that rotation look like in that region?
Because each region is slightly different.
(10:19):
You just don't have the same rotation in every region.
In New Zealand, they look at each one and say, okay, it fits
in here and it's the mix betweenvegetable and arable and things
like that. So it's a good sweet spot.
It's economic because most of our growers do know how to grow
really good produce at an economic rate.
So we can get some of the best tonnages in the world off our
(10:39):
land. I think you could agree with
that. So if we can do that, if we can
do the front part that as well as that, why can't we do the
second part, which is that supply chain to retail?
Why can't that be something thatcan be worked out?
And in Australia at the moment, they're looking at kind of
margin shearing because again, same problem in Australia as in
(11:02):
New Zealand where they're looking at sovereignty of this
their food systems is as much tonational security as food
security just because of geopolitics at the moment.
And we we think of definitely moved away from a rules based
system so. Look, there was a yeah, there
was a dinner conversation over the weekend was actually talking
(11:25):
about the importance of, of ensuring that we have some, some
food security in New Zealand. You know, we've seen there's
some, some reasonably large geopolitical disruptions
occurring around the world at the moment.
We're seeing some pressure coming on to things like fuel
and fertiliser and plastics. And it's going to be a fairly
tumultuous couple of years. And we, and this was one of our
(11:47):
conversations was around ensuring that we actually have
good supply of food to to feed New Zealanders.
If there are going to be restrictions around global
movement of product, we need to make sure that we've got food
supplies secured for New Zealand.
That's first and foremost. Yeah, a really interesting
concept. Ohh, What should our growers be
(12:08):
doing at the moment? I mean, I, I go back to that
word catastrophic now, a catastrophic change in how their
their system has been structured.
What, what should they be doing?If you know, what would be your
advice to any growers who are listening in and and holding
their head in their hands at themoment wondering what they're
going to do? Come on, Matt, you've got the
(12:30):
answer you have. I know you're here.
I don't hear you. Yeah, the wheels of the bus be a
good work, Anthony. Yeah, I'd like to pivot this
conversation around completely away from that.
And I I want to talk about consumers and where we go to buy
these products. Most people go Yeah, Well, well,
(12:55):
I'll, I'll we'll see whether my.Answer yeah, I'm friends with
gonna be a big impact to consumers and I do think.
Yeah, and I just thought I'd putit into Google.
One kg of frozen peas in New Zealand costs between $3.50 and
$6 for one kg of frozen peas in New Zealand at the supermarket.
(13:20):
How can it cost? How can be sorry?
How can there be that much variation in cost?
The grower gets paid pretty muchthe same.
Doesn't matter what provider they sell to, whether it's
McCain's or Watties or Tallies, all similar prices.
Surely these factories will havesimilar prices, so how can the
(13:40):
retail price be completely different?
The only justification for it isthe margin that supermarkets are
charging. It's really where it comes down
to, isn't it? That's quite a, a, quite a very
difference. And I'll be, I'll be really
curious to know, you know, wheredoes the New Zealand grown
product sit in there? Look, I think that's why in
(14:01):
Australia they're looking at margin cheering and saying,
okay, what what is an acceptablelevel for margin?
Why is that important as becausethat fresh produce butchery
bakery, that's where they super makes make all their GP, right?
All their gross profit is from those fresh items.
They do have use by dates. So they do carry a higher risk.
(14:23):
However, they also that's why they put them at the front of
the supermarket, right? You've got to go through that
section 1st and that's everybody's had that
indoctrinated into them that, you know, we have to eat those 5
+ a day. And it's, it's important to our
health and science. It's not wrong.
That's true. So the margins are always higher
(14:45):
in in the in those fresh categories.
However, if if it grows, gettinga 15% margin in a supermarket's
getting a 45% margin, is that fair?
No, absolutely not. That's probably the question
that Matt, Matt's wanting us to answer.
I don't think we've got the answer.
We in New Zealand, we are very high cost model.
(15:08):
If you think about what the supermarkets generate out of New
Zealand as differently high costmodel and there are really only
two options in which means to say is that highly competitive?
I wouldn't think so anyway that again we're Long Skinny Island,
it's very hard to see of us. So there are somethings that we
just have to make sure that we remember him before we we overly
(15:34):
critique how our supermarket system in New Zealand see that.
And it's such a critical piece as, as these, there is a, a huge
role that consumers are going toplay here and in the amount of
power that it consumers can actually dictate into the
marketplace by the, the decisions they make around
purchasing. And I, and I really want to kind
(15:55):
of finish out on a little bit ofa positive note.
And I'm going to go back to something you brought up earlier
on in the interview met around, you know, do we need to do we
need to have a buy New Zealand mate campaign again, because
look, let's be fair here. A lot of our major trading
partners around the world are doing it.
You know, I was in Australia notthat long ago and you could see
(16:18):
it, you know, by Aussie grown byAussie made.
Every time you go to the UK, youhear about it, you know, support
air air primary, you know, UK based primary industries.
You come to New Zealand and and,and, and we're surprisingly
quiet about it. Is this something that we could
be doing a little bit more of inNew Zealand to help support our
local growers? Because I'm fairly certain,
(16:40):
speaking anecdotally from my ownpoint of view, I always try and
support a New Zealand grow, whether it's Brian, New Zealand
made oats or checking the tins of tomatoes on the shelf to
ensure that I am supporting a New Zealand grower rather than
Italian one. If I've got a choice, I'm happy
to pay a dollar or two more. Is this something we could be we
(17:01):
could be doing as an industry? Absolutely.
And I think it's about educationas well because as you said, you
may not actually know where those tomatoes are coming from.
It might be this brand or that brand and you don't know.
So I'm all about the consumer having the final decision on
these products. And if it's a decision that they
want to support New Zealand, then albeit it's a great outcome
(17:22):
and we need to get on to. It into your thoughts here too.
Well, look, I'm doing. I'm shamelessly going to pitch a
concept they both met and I are working on at the moment.
It was called add one more vegetable and it's a bit of a
lift and shift from what they'redoing in Australia, which is
plus One South. So we are asking our consumers
(17:45):
for a number of reasons. One is around good health
outcomes as much as supporting the industry as well.
We are, we not asking for 5 + a day, We're just asking everybody
in New Zealand just one more vegetable, which is 75 or one
more serve, sorry, which is 75 grammes into their diet each
day, which is about the size of an apple.
(18:05):
So if we can do all do that, ourgrowth will be happy, our supply
chains will be happy and the health of our people be in a
much better place. So isn't it a triple win?
And also the cost of healthcare will be used and all those all
the right places like for those elective surgeries and for those
cancer drugs that we need. Look, I one thing I would like
(18:29):
to encourage Milton is that the we, it's not really a beat up on
the canes and what is in Heinz. We possibly need as have a sit
down and have a bit of a debriefon how this has happened because
we don't want it to happen again.
It's the ripple effect is just too high if you even think about
seed production, right? The PC production was just
(18:53):
underpinned all seed production in New Zealand.
So if you take out 50% of the seed production in New Zealand,
it's going to have a ripple effect.
So I just don't want us to go into this kind of blindly.
Can we work as an ecosystem to make sure that it can work in
(19:15):
the future? So that's everybody having a say
on how this can how this can work.
And it's about the regions, it'sabout the growers, it's about
central government, it's about the industries and it's about
supply chain. So I think it's one that we all
have to kind of come together onto ensure that we are resilient
(19:35):
in the future because at the moment everything seems to be
hitting us between the eyes and flattening some industries.
Yep, that definitely is. It's a case of, I think if we
had some of those better networks across the industry,
we'd be in a position to be a little bit more proactive rather
than reactive and, and who knows, who knows what solutions
(19:58):
could be found. Fully agree.
I, I just think there are certain, uh, Tier 2 and tier 3
industries that are teetering atthe moment.
And I don't, I just think the process vegetables 1 was just a
huge wake up call and we just have to think about how we can
support some of those developingindustries so they they have a
(20:23):
fair chance of success. I've had a couple of growers
that I still do a bit of agronomy work with.
Have Romans said, right, so peasare now off the table.
What do I do with my rotation? Because they were an important
part of that rotation, because you could use them quite
strategically, because it would push production, you know, yet
they, as they said, look, you know, they might have only been
(20:44):
breaking even or making a small profit on the on the process
piece for the last few years. But in the rotation, you know
you do pays before you do, perhaps a critical small seed
crop or a vegetable crop, you can drive an extra half a tonne
of of seed yield and that's where you make your money.
(21:06):
Portant to to sort of document some here.
It's this whole farm systems space.
You know, it's such a critical part of the the farm system.
You may not have necessarily, itmay not have been your money
maker, but it's part of your farm system.
It kept your farm sustainable and it actually had flow on
(21:30):
effects into the other crops yougrew.
And now following a crop of peas, peas being a league human
being a nitrogen fixer. And you leave a lot of that, you
know, some of that piece drill behind you leave a lot of
fertility behind. You leave a lot of organic
matter behind. The subsequent crop grows beta
and and they formed an importantpart of especially of that small
(21:52):
seed rotation in places like Canterbury.
And now that's gone. We are really scratching our
head and what we're going to find, what we're going to be
able to use to fill that gap. I I fully agree, Milton and Dad,
I think that's the part that I'mnot sure the rest of New
Zealand's picked up on yet. It's we do have these really
good tight rotations which work in our regions and and I'm just
(22:15):
thinking about folks Bay and Canterbury just now those guys
are searching at the moment I'm.Sure.
You look at the complex crop rotations they've got, you know
where they might have, you know,you might have a wheat crop in
there, you might have a barley crop in there.
You'd have processed peas in there.
You'd have some grass seed production, you'd have some
vegetable seed production, you'dhave some, possibly some Clover
(22:36):
seed production. And it's a complex, complicated
crop rotation there. You know, with processed peas in
the Max, you can easily get out to 8 to 10 year crop rotations.
That's sustainable. They drop, you know, peas drops
out. Yeah, that'd be another league
that can go in there. And you're going to have to find
(22:56):
something else to go into it andthat nothing comes to mind that
would be quite as good as that Protation.
Look, just one other thing is that this whole episode has
formed a bit of a catalyst and know that Meres of Forsberg are
pulling together a task force and I think the Greens are
(23:19):
saying that we possibly do need to.
Have a bit of. A review here.
So we just have to keep the pressure on and that's why I
would encourage all your growersto make contact to Matt Thorne
and he's really keen to pick up the believe in conversation and
and take it forward. Anderson, guys, thank you very
much for your time. Good to be able to discuss a
(23:41):
what is really quite a catastrophic event for the New
Zealand industry, but good to know that we do have bodies like
vegetables and dip and processedveggies and dip able to support
our growers through this, this tumultuous type.
Thanks for your time today. Thanks, Melvin.
Thank you for listening to Blue Sheep Diary.
This conversation has been brought to you by Pete G
(24:02):
Wrightson. We have new content each and
every week, so be sure to subscribe so you don't miss a
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dot NZ. See you next time, Jackie,
Diana.
Welcome to Blue Chip Diary, the go to podcast for farmers and
growers. My name is Milton Monroe, your
host and technical team manager.What he's in.
McCain staples in the frozen vegetable aisle have just
announced they're closing up shop.
And with these closures, hundreds of jobs going to go.
They've announced factory closures and Auckland,
(00:32):
Christchurch and Dunedin, and they're frozen packing lines and
Hastings. McCain's is also exiting
Hastings with its vegetable processing plant set to close by
January next year. What does this mean for the
growers supplying these companies in their rural
communities? Will this fundamentally change
the sector and will New Zealanders struggle to find home
grown products on their supermarket shelves?
(00:55):
To help me have this conversation, I am joined by
Matt Thorne, Business manager ofProcess Vegetables and chief
executive for Vegetables New Zealand, Anthony Hayward.
Welcome to the show Jeans. So look, let's start at the very
top here. What is in McCain's have come
out and said high operation costs, rising inflation and
cheaper imports are behind thesedecisions.
(01:18):
Is this a fierce animation or doyou think is more to it than
that? Met probably the best person to
talk to this, but I'll do a brief intro if you like Milton
and yeah, we can hand to Matt and he can he can take her take
us all the way to the end if we want to let him do that So look
I think it's a whole lot of little things all coming
(01:39):
together at once and it probablystarted 3 five years ago from
post COVID. There's been a lot of those
increases in input costs that have normally been picked up by
the supply chain and the processors.
But what we have to remember is that the increases in those
(02:02):
input costs like fertiliser, labour, energy, only a certain
amount of that can be pushed through to the end consumer.
So the price really doesn't movetoo much.
All the retail definitely don't want the price to move too much
just because there's probably likely to be supplementary or
parallel importing coming in. So there's always a fine line to
(02:24):
tread. However, the industry has gone
through a lot of change and someof the plants getting pretty old
now too. So there's some things there
that probably need to change. And I think what's happened in
the last 12 months is that some of those import costs have have
got to the level where they justnot acceptable anymore.
(02:46):
So in particular, that's probably energy.
And of course, we've just had the latest minimum wage
increase, which does lift the level of all pay brackets
despite what people say. But Matt, take it away.
You've got some stats that'll help kind of give some clarity
on what the markets looking likeand possibly what the process is
(03:08):
undertaking. Yeah, well, if you think about
processed vegetables, it covers peas, beans, carrots and sweet
corn. The industry say three years ago
was about 80 million. Well, it's paid directly to the
growers. So that's the grower payment on
top of that. Then you've gotta add in what
the process is value is in the chain.
And then on top of that you've got the retail value, which is
(03:30):
significantly higher. So the the closure of McCain's
and Watties, McCain's have got over 100 growers that will be
affected what he's over 200 growers.
Those two closures affect the industry by 42%.
So it's a significant blow to the whole sector.
At the moment, the industry's looking at around $50 million
(03:52):
worth of payment to growers and there is significantly down from
three years ago. Basically just to do with retail
demand is a lot less compared towhat um, what we have been
consuming and we've got the alternates on the shelf that are
significantly cheaper than the New Zealand growers product.
So if we're looking at the situation now next year, the
(04:14):
process vegetable payment to growers will be around $29
million, so significantly down to what it was three years ago.
So it's a real changing time. That's a fact.
That is a phenomenal reduction. That's almost yeah, it it
beggars belief and it's hard to get your head around it.
(04:35):
I mean, that's going to have an enormous flow on impact into
into the local economies where, where these growers are
operated, isn't it? Yeah, it's significant.
I mean, you think about all the different transport providers,
the harvesting companies, the fertiliser companies, the
service providers, the jobs thatare employed, not only just to
those farms that we talked about, but everybody in between.
(04:55):
It's it's pretty catastrophic for New Zealand.
Yeah, catastrophic. That's the that's the word I
think I'm, I was trying to find there.
So tell me a little bit more around these growers.
I mean, the growers that are going to be impacted here, you
know, processed vegetables are obviously just part of their of
their market, but this is going to have an enormous impact on
(05:16):
their whole crop rotation. What they're actually putting in
this is this is huge. Yeah, it's a significant receipt
for them because trying to do land change into dairy or
something like that as a completely different equation.
And yeah, I think there's a lot of question marks about where to
(05:37):
go to from here. No, I don't have the answers,
but it has been tracking that way for a couple of years.
So they have had the unfortunatesituation of where a company
might come in and and say, yes, we'll do a contract for a couple
of paddocks. That's been halved in the last
couple of years with some growers.
So they have got used to the fact that there is less demand
(05:58):
for their product. To tell me a little bit more
around these these these products that are being imported
into New Zealand some of the thecheaper alternatives where are
they coming from and and and howare they able to be so cheap I
mean I. Know if you look at the the
Watties, always look for the Watties tomatoes in a can,
right? That's a bit of a staple.
(06:20):
You go for it, right? When you're looking for, when
you're looking for tomatoes and a can, you just pick them up off
the shelf. But if you actually look at it,
what's on the shelf now, there'sa lot of product coming in from
Italy or from Europe. We don't know what the grade
standards are there in terms of spray regimes, chemical
applications, labour rates, anything like that.
We've got no idea what that product coming into New Zealand.
(06:44):
Right, you've made me question afew of my own choices here.
I know there was a couple of dozens of of 10 Watties tomatoes
ended up in the shopping trolleyon Saturday morning.
I'm going home to check them after this.
Is it legitimately cheaper to grow these crops overseas or are
they just cutting a few more corners?
(07:06):
I don't know. I'm not over there growing it.
Yeah, I guess that's the that's the disadvantage, isn't it to
both of you. I mean, if you you know New
Zealand grown, we know we're we're on a level playing field.
We know we've got the right levels of standards around food
safety and around traceability and assurance.
Suddenly with we're bringing in cheaper products there.
(07:27):
There is a question mark there. Sorry, you were going to say.
Something in and well, there's nothing wrong with that.
At the end of the day, the New Zealand consumer is going to
decide what they want to buy andlet them decide it.
It's fine if it's a dollar. If it's a dollar versus $2.00,
whatever it is, it doesn't actually matter.
New Zealand consumers should be able to choose.
But I think what we should be doing is getting in behind a
campaign where we want to support New Zealand and New
(07:48):
Zealand growers. Like why don't we bring the They
All campaign, which was by New Zealand and what was it again,
Milton, What was that one? Ohh I got you.
It was tech wording, but I can Ican remember the the icon they
used to have the old Kiwi on theside, the old blue Kiwi on the
label. And, and you know, you might get
(08:10):
a bit of buying from the consumers and they might
actually realise that they're that is supporting New Zealand
and we know we've got a better, better product.
Yeah. The other thing that you've got
to remember Milton, over the last 5-10 years, we have done a
lot in our foreign policy on free trade agreements.
(08:30):
And once you get into a free trade agreement, you your
negotiation ability and it's, it's a little bit limited
because you have to have that two way by annual bilateral
trade. And that's what we have to
remember. We have to for us to export to
all these markets, we've got to have that bilateral trade coming
(08:52):
back. So is that something that we
have to be a little bit circumspect on?
The other thing you mentioned before about is this a getting
close to a dumping our situation.
So is the product coming into New Zealand it at a rate which
is not overly subsidised and landed in New Zealand, which
(09:16):
pretty much means that it's not competitive for the New Zealand
growing product. So we probably have to be a
little bit tighter on how we howwe view that and that we've got
levers in place that we can use around that, whether it S the
Commerce Commission or anything.But we probably need to find out
what those thresholds are too, because is there, if there is a
(09:38):
non conformance, where does where does that number need to
be before it's, it's considered something that should be
investigated. So I think this is a time where
we probably do need to ask some of these questions because we
are talking about national security as much as food
security here, because if we have 50% of our industry exit,
(09:59):
it does put a lot of constraint on some of those supply chains.
So, and to the other point, future growth are very good,
like you say, crop rotation, right?
So if we remove X number of products from a rotation, what's
that rotation look like in that region?
Because each region is slightly different.
(10:19):
You just don't have the same rotation in every region.
In New Zealand, they look at each one and say, okay, it fits
in here and it's the mix betweenvegetable and arable and things
like that. So it's a good sweet spot.
It's economic because most of our growers do know how to grow
really good produce at an economic rate.
So we can get some of the best tonnages in the world off our
(10:39):
land. I think you could agree with
that. So if we can do that, if we can
do the front part that as well as that, why can't we do the
second part, which is that supply chain to retail?
Why can't that be something thatcan be worked out?
And in Australia at the moment, they're looking at kind of
margin shearing because again, same problem in Australia as in
(11:02):
New Zealand where they're looking at sovereignty of this
their food systems is as much tonational security as food
security just because of geopolitics at the moment.
And we we think of definitely moved away from a rules based
system so. Look, there was a yeah, there
was a dinner conversation over the weekend was actually talking
(11:25):
about the importance of, of ensuring that we have some, some
food security in New Zealand. You know, we've seen there's
some, some reasonably large geopolitical disruptions
occurring around the world at the moment.
We're seeing some pressure coming on to things like fuel
and fertiliser and plastics. And it's going to be a fairly
tumultuous couple of years. And we, and this was one of our
(11:47):
conversations was around ensuring that we actually have
good supply of food to to feed New Zealanders.
If there are going to be restrictions around global
movement of product, we need to make sure that we've got food
supplies secured for New Zealand.
That's first and foremost. Yeah, a really interesting
concept. Ohh, What should our growers be
(12:08):
doing at the moment? I mean, I, I go back to that
word catastrophic now, a catastrophic change in how their
their system has been structured.
What, what should they be doing?If you know, what would be your
advice to any growers who are listening in and and holding
their head in their hands at themoment wondering what they're
going to do? Come on, Matt, you've got the
(12:30):
answer you have. I know you're here.
I don't hear you. Yeah, the wheels of the bus be a
good work, Anthony. Yeah, I'd like to pivot this
conversation around completely away from that.
And I I want to talk about consumers and where we go to buy
these products. Most people go Yeah, Well, well,
(12:55):
I'll, I'll we'll see whether my.Answer yeah, I'm friends with
gonna be a big impact to consumers and I do think.
Yeah, and I just thought I'd putit into Google.
One kg of frozen peas in New Zealand costs between $3.50 and
$6 for one kg of frozen peas in New Zealand at the supermarket.
(13:20):
How can it cost? How can be sorry?
How can there be that much variation in cost?
The grower gets paid pretty muchthe same.
Doesn't matter what provider they sell to, whether it's
McCain's or Watties or Tallies, all similar prices.
Surely these factories will havesimilar prices, so how can the
(13:40):
retail price be completely different?
The only justification for it isthe margin that supermarkets are
charging. It's really where it comes down
to, isn't it? That's quite a, a, quite a very
difference. And I'll be, I'll be really
curious to know, you know, wheredoes the New Zealand grown
product sit in there? Look, I think that's why in
(14:01):
Australia they're looking at margin cheering and saying,
okay, what what is an acceptablelevel for margin?
Why is that important as becausethat fresh produce butchery
bakery, that's where they super makes make all their GP, right?
All their gross profit is from those fresh items.
They do have use by dates. So they do carry a higher risk.
(14:23):
However, they also that's why they put them at the front of
the supermarket, right? You've got to go through that
section 1st and that's everybody's had that
indoctrinated into them that, you know, we have to eat those 5
+ a day. And it's, it's important to our
health and science. It's not wrong.
That's true. So the margins are always higher
(14:45):
in in the in those fresh categories.
However, if if it grows, gettinga 15% margin in a supermarket's
getting a 45% margin, is that fair?
No, absolutely not. That's probably the question
that Matt, Matt's wanting us to answer.
I don't think we've got the answer.
We in New Zealand, we are very high cost model.
(15:08):
If you think about what the supermarkets generate out of New
Zealand as differently high costmodel and there are really only
two options in which means to say is that highly competitive?
I wouldn't think so anyway that again we're Long Skinny Island,
it's very hard to see of us. So there are somethings that we
just have to make sure that we remember him before we we overly
(15:34):
critique how our supermarket system in New Zealand see that.
And it's such a critical piece as, as these, there is a, a huge
role that consumers are going toplay here and in the amount of
power that it consumers can actually dictate into the
marketplace by the, the decisions they make around
purchasing. And I, and I really want to kind
(15:55):
of finish out on a little bit ofa positive note.
And I'm going to go back to something you brought up earlier
on in the interview met around, you know, do we need to do we
need to have a buy New Zealand mate campaign again, because
look, let's be fair here. A lot of our major trading
partners around the world are doing it.
You know, I was in Australia notthat long ago and you could see
(16:18):
it, you know, by Aussie grown byAussie made.
Every time you go to the UK, youhear about it, you know, support
air air primary, you know, UK based primary industries.
You come to New Zealand and and,and, and we're surprisingly
quiet about it. Is this something that we could
be doing a little bit more of inNew Zealand to help support our
local growers? Because I'm fairly certain,
(16:40):
speaking anecdotally from my ownpoint of view, I always try and
support a New Zealand grow, whether it's Brian, New Zealand
made oats or checking the tins of tomatoes on the shelf to
ensure that I am supporting a New Zealand grower rather than
Italian one. If I've got a choice, I'm happy
to pay a dollar or two more. Is this something we could be we
(17:01):
could be doing as an industry? Absolutely.
And I think it's about educationas well because as you said, you
may not actually know where those tomatoes are coming from.
It might be this brand or that brand and you don't know.
So I'm all about the consumer having the final decision on
these products. And if it's a decision that they
want to support New Zealand, then albeit it's a great outcome
(17:22):
and we need to get on to. It into your thoughts here too.
Well, look, I'm doing. I'm shamelessly going to pitch a
concept they both met and I are working on at the moment.
It was called add one more vegetable and it's a bit of a
lift and shift from what they'redoing in Australia, which is
plus One South. So we are asking our consumers
(17:45):
for a number of reasons. One is around good health
outcomes as much as supporting the industry as well.
We are, we not asking for 5 + a day, We're just asking everybody
in New Zealand just one more vegetable, which is 75 or one
more serve, sorry, which is 75 grammes into their diet each
day, which is about the size of an apple.
(18:05):
So if we can do all do that, ourgrowth will be happy, our supply
chains will be happy and the health of our people be in a
much better place. So isn't it a triple win?
And also the cost of healthcare will be used and all those all
the right places like for those elective surgeries and for those
cancer drugs that we need. Look, I one thing I would like
(18:29):
to encourage Milton is that the we, it's not really a beat up on
the canes and what is in Heinz. We possibly need as have a sit
down and have a bit of a debriefon how this has happened because
we don't want it to happen again.
It's the ripple effect is just too high if you even think about
seed production, right? The PC production was just
(18:53):
underpinned all seed production in New Zealand.
So if you take out 50% of the seed production in New Zealand,
it's going to have a ripple effect.
So I just don't want us to go into this kind of blindly.
Can we work as an ecosystem to make sure that it can work in
(19:15):
the future? So that's everybody having a say
on how this can how this can work.
And it's about the regions, it'sabout the growers, it's about
central government, it's about the industries and it's about
supply chain. So I think it's one that we all
have to kind of come together onto ensure that we are resilient
(19:35):
in the future because at the moment everything seems to be
hitting us between the eyes and flattening some industries.
Yep, that definitely is. It's a case of, I think if we
had some of those better networks across the industry,
we'd be in a position to be a little bit more proactive rather
than reactive and, and who knows, who knows what solutions
(19:58):
could be found. Fully agree.
I, I just think there are certain, uh, Tier 2 and tier 3
industries that are teetering atthe moment.
And I don't, I just think the process vegetables 1 was just a
huge wake up call and we just have to think about how we can
support some of those developingindustries so they they have a
(20:23):
fair chance of success. I've had a couple of growers
that I still do a bit of agronomy work with.
Have Romans said, right, so peasare now off the table.
What do I do with my rotation? Because they were an important
part of that rotation, because you could use them quite
strategically, because it would push production, you know, yet
they, as they said, look, you know, they might have only been
(20:44):
breaking even or making a small profit on the on the process
piece for the last few years. But in the rotation, you know
you do pays before you do, perhaps a critical small seed
crop or a vegetable crop, you can drive an extra half a tonne
of of seed yield and that's where you make your money.
(21:06):
Portant to to sort of document some here.
It's this whole farm systems space.
You know, it's such a critical part of the the farm system.
You may not have necessarily, itmay not have been your money
maker, but it's part of your farm system.
It kept your farm sustainable and it actually had flow on
(21:30):
effects into the other crops yougrew.
And now following a crop of peas, peas being a league human
being a nitrogen fixer. And you leave a lot of that, you
know, some of that piece drill behind you leave a lot of
fertility behind. You leave a lot of organic
matter behind. The subsequent crop grows beta
and and they formed an importantpart of especially of that small
(21:52):
seed rotation in places like Canterbury.
And now that's gone. We are really scratching our
head and what we're going to find, what we're going to be
able to use to fill that gap. I I fully agree, Milton and Dad,
I think that's the part that I'mnot sure the rest of New
Zealand's picked up on yet. It's we do have these really
good tight rotations which work in our regions and and I'm just
(22:15):
thinking about folks Bay and Canterbury just now those guys
are searching at the moment I'm.Sure.
You look at the complex crop rotations they've got, you know
where they might have, you know,you might have a wheat crop in
there, you might have a barley crop in there.
You'd have processed peas in there.
You'd have some grass seed production, you'd have some
vegetable seed production, you'dhave some, possibly some Clover
(22:36):
seed production. And it's a complex, complicated
crop rotation there. You know, with processed peas in
the Max, you can easily get out to 8 to 10 year crop rotations.
That's sustainable. They drop, you know, peas drops
out. Yeah, that'd be another league
that can go in there. And you're going to have to find
(22:56):
something else to go into it andthat nothing comes to mind that
would be quite as good as that Protation.
Look, just one other thing is that this whole episode has
formed a bit of a catalyst and know that Meres of Forsberg are
pulling together a task force and I think the Greens are
(23:19):
saying that we possibly do need to.
Have a bit of. A review here.
So we just have to keep the pressure on and that's why I
would encourage all your growersto make contact to Matt Thorne
and he's really keen to pick up the believe in conversation and
and take it forward. Anderson, guys, thank you very
much for your time. Good to be able to discuss a
(23:41):
what is really quite a catastrophic event for the New
Zealand industry, but good to know that we do have bodies like
vegetables and dip and processedveggies and dip able to support
our growers through this, this tumultuous type.
Thanks for your time today. Thanks, Melvin.
Thank you for listening to Blue Sheep Diary.
This conversation has been brought to you by Pete G
(24:02):
Wrightson. We have new content each and
every week, so be sure to subscribe so you don't miss a
thing. If there is a topic you'd like
to hear more about, e-mail us atpodcast at peachtreebrinson.co
dot NZ. See you next time, Jackie,
Diana.
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